China Automotive Systems Reports 17.4% Increase in Earnings Per Share in the First Quarter of 2024
China Automotive Systems (NASDAQ: CAAS) reported a 17.4% increase in diluted earnings per share to $0.27 for Q1 2024, compared to $0.23 in Q1 2023. Net sales slightly decreased by 2.0% to $139.4 million. Gross profit rose by 11.6% to $24.1 million with a gross margin of 17.3%. Income from operations surged by 26.0% to $9.7 million, and net income attributable to shareholders increased to $8.3 million from $6.8 million in Q1 2023. Cash flow from operating activities improved significantly to $10.5 million. Despite a 12.4% drop in North American sales, Brazilian sales grew by 17.6%. R&D expenses decreased by 17.2%, while selling and G&A expenses increased. The company maintains its revenue guidance of $605.0 million for the full fiscal year 2024.
- Diluted earnings per share increased by 17.4% to $0.27.
- Gross profit grew by 11.6% to $24.1 million.
- Income from operations rose by 26.0% to $9.7 million.
- Net income attributable to shareholders increased to $8.3 million.
- Cash flow from operating activities improved to $10.5 million.
- Gross margin improved from 15.2% to 17.3%.
- Brazilian sales increased by 17.6%.
- Net other income increased, contributing to a higher income before tax.
- Net sales decreased by 2.0% to $139.4 million.
- North American sales dropped by 12.4%.
- Selling expenses increased by 20.6% to $4.1 million.
- G&A expenses rose to $5.5 million due to higher payroll and maintenance costs.
- R&D expenses decreased by 17.2%, potentially impacting future product innovation.
- Income tax expense increased to $1.7 million from $0.8 million.
- Equity in losses of affiliated companies was $0.8 million.
Insights
China Automotive Systems, Inc. (CAAS) reported a strong first quarter for 2024, with a notable
The most impressive metric is the diluted income per share, which increased by
It's essential to note the
However, investors should be aware of the sectoral challenges, particularly the fluctuating demand in North America and the modest decline in traditional steering product sales. Despite these hurdles, the company's clear commitment to advancing its EPS and ADAS programs indicates a strategic pivot towards future growth segments.
Overall, CAAS's financials suggest a well-managed company with a balanced approach to cost management and growth investments. Retail investors would find the improved profitability and strong liquidity position reassuring, although keeping an eye on regional sales trends and sectoral dynamics remains crucial.
Looking deeper into the market dynamics, CAAS's mixed international sales performance is noteworthy. Sales in Brazil grew by
The consistent contribution of
Investors should view the stable R&D expenses as a positive sign, as it reflects ongoing investments in innovation, important for maintaining competitiveness in the automotive sector. The collaboration with Sentient AB and focus on enhancing ADAS capabilities will likely position CAAS well in the evolving market landscape.
However, the slight decline in net sales and increased operational costs, such as higher selling and administrative expenses, pose potential headwinds. These factors could impact short-term profitability if not managed carefully.
In conclusion, CAAS demonstrates a strong strategic vision with a balanced focus on current profitability and future growth. Retail investors should appreciate the company's efforts to align with industry trends while navigating short-term regional market fluctuations.
First Quarter 2024 Highlights
- Net sales were
$139.4 million - Gross profit increased by
11.6% to$24.1 million 17.3% , compared with$21.6 million 15.2% gross margin in the first quarter of 2023 - Income from operations increased by
26.0% to$9.7 million $7.7 million - Diluted income per share increased by
17.4% to$0.27 $0.23 - Cash, cash equivalents, and short-term investments were
$135.8 million - Net cash provided by operating activities was
$10.5 million $1.4 million
Mr. Qizhou Wu, chief executive officer of CAAS, commented, "We are pleased with achieving higher gross profit, income from operations, diluted income per share and net cash flow from operating activities in the 2024 first quarter. We remain confident in our sales growth in 2024, despite a slight decline in the 2024 first quarter. Our electric power steering ("EPS") sales percentage remained consistent around
"We continued to invest in our products as research and development ("R&D") expenses remained stable. Investments targeted improving performance of our traditional steering products continued even as we focus on expanding our EPS portfolio of products and enhance our Advanced Driver Assistance Systems ("ADAS") program with Sentient AB and our clients."
Mr. Jie Li, chief financial officer of CAAS, commented, "We had total cash, cash equivalents, and short-term investments of
First Quarter of 2024
Net sales decreased by
Gross profit increased by
Gain on other sales was
Selling expenses increased by
General and administrative expenses ("G&A expenses") increased to
Research and development expenses ("R&D expenses") decreased by
Other income was
Income from operations was
Interest expense was
Financial expense, net was
Income before income tax expenses and equity in earnings of affiliated companies increased by
Equity in losses of affiliated companies was
Income tax expense was
Net income attributable to parent company's common shareholders was
The weighted average number of diluted common shares outstanding was 30,185,702 in the first quarter of 2024 compared to 30,193,082 in the first quarter of 2023.
Balance Sheet
As of March 31, 2024, total cash, cash equivalents, and short-term investments were
Business Outlook
Management has reiterated revenue guidance for the full fiscal year 2024 of
Conference Call
Management will conduct a conference call on May 14, 2024, at 8:00 A.M. EDT/8:00 P.M. Beijing Time to discuss these results. A question and answer session will follow management's presentation. To participate, please see the dial-in information below, enter the call 10 minutes before the aforementioned start time and ask to be connected to the "China Automotive Systems" conference call with pin number 144876:
Phone Number: +1-888-506-0062 (
Phone Number: +1-973-528-0011 (International)
Mainland China Toll Free: +86-400-120-3199
A replay of the call will be available on the Company's website under the investor relations section.
About China Automotive Systems, Inc.
Based in
Forward-Looking Statements
This press release contains statements that are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. As a result, the Company's actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 28, 2024, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Any of these factors and other factors beyond our control, could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations. A prolonged disruption or any further unforeseen delay in our operations of the manufacturing, delivery and assembly process within any of our production facilities could continue to result in delays in the shipment of products to our customers, increased costs and reduced revenue. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.
For further information, please contact:
Jie Li
Chief Financial Officer
China Automotive Systems, Inc.
jieli@chl.com.cn
Kevin Theiss
Awaken Advisors
+1-212-510-8922
Kevin@awakenlab.com
-Tables Follow –
China Automotive Systems, Inc. and Subsidiaries | ||||||
Condensed Unaudited Consolidated Balance Sheets | ||||||
(In thousands of USD unless otherwise indicated) | ||||||
March 31, 2024 | December 31, 2023 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 112,557 | $ | 114,660 | ||
Pledged cash | 44,028 | 40,534 | ||||
Accounts and notes receivable, net - unrelated parties | 255,119 | 261,237 | ||||
Accounts and notes receivable, net - related parties | 11,599 | 8,169 | ||||
Inventories | 109,082 | 112,392 | ||||
Other current assets | 38,047 | 27,083 | ||||
Total current assets | 570,432 | 564,075 | ||||
Non-current assets: | ||||||
Property, plant and equipment, net | 99,395 | 101,359 | ||||
Land use rights, net | 9,151 | 9,233 | ||||
Long-term investments | 59,278 | 60,173 | ||||
Other non-current assets | 32,416 | 31,600 | ||||
Total assets | $ | 770,672 | $ | 766,440 | ||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Short-term loans | $ | 40,471 | $ | 48,005 | ||
Accounts and notes payable-unrelated parties | 228,705 | 240,739 | ||||
Accounts and notes payable-related parties | 14,265 | 12,839 | ||||
Accrued expenses and other payables | 44,839 | 44,771 | ||||
Other current liabilities | 35,409 | 37,385 | ||||
Total current liabilities | 363,689 | 383,739 | ||||
Long-term liabilities: | ||||||
Long-term tax payable | 8,781 | 8,781 | ||||
Other non-current liabilities | 5,360 | 5,498 | ||||
Total liabilities | $ | 377,830 | $ | 398,018 | ||
Mezzanine equity: | ||||||
Redeemable non-controlling interests | 621 | 613 | ||||
Stockholders' equity: | ||||||
Common stock, | $ | 3 | $ | 3 | ||
Additional paid-in capital | 69,722 | 63,731 | ||||
Retained earnings- | ||||||
Appropriated | 12,174 | 11,851 | ||||
Unappropriated | 292,776 | 284,832 | ||||
Accumulated other comprehensive income | (8,558) | (8,258) | ||||
Treasury stock – 2,152,600 and 2,152,600 shares as of March 31, 2024 and December 31, 2023, | (7,695) | (7,695) | ||||
Total parent company stockholders' equity | 358,422 | 344,464 | ||||
Non-controlling interests | 33,799 | 23,345 | ||||
Total stockholders' equity | 392,221 | 367,809 | ||||
Total liabilities, mezzanine equity and stockholders' equity | $ | 770,672 | $ | 766,440 | ||
China Automotive Systems, Inc. and Subsidiaries | ||||||
Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income | ||||||
(In thousands of USD, except share and per share amounts) | ||||||
Three Months Ended March 31, | ||||||
2024 | 2023 | |||||
Net product sales ( | $ | 139,394 | $ | 142,243 | ||
Cost of products sold ( | 115,325 | 120,625 | ||||
Gross profit | 24,069 | 21,618 | ||||
Gain on other sales | 514 | 653 | ||||
Less: Operating expenses | ||||||
Selling expenses | 4,073 | 3,384 | ||||
General and administrative expenses | 5,547 | 4,753 | ||||
Research and development expenses | 5,312 | 6,390 | ||||
Total operating expenses | 14,932 | 14,527 | ||||
Income from operations | 9,651 | 7,744 | ||||
Other income, net | 2,403 | 1,502 | ||||
Interest expense | (258) | (249) | ||||
Financial expense, net | (12) | (422) | ||||
Income before income tax expenses and equity in earnings of affiliated companies | 11,784 | 8,575 | ||||
Less: Income taxes | 1,743 | 829 | ||||
Add: Equity in (losses)/earnings of affiliated companies | (777) | 137 | ||||
Net income | 9,264 | 7,883 | ||||
Less: Net income attributable to non-controlling interests | 989 | 1,055 | ||||
Accretion to redemption value of redeemable non-controlling interests | (8) | (8) | ||||
Net income attributable to parent company's common shareholders | $ | 8,267 | $ | 6,820 | ||
Comprehensive income: | ||||||
Net income | $ | 9,264 | $ | 7,883 | ||
Other comprehensive income: | ||||||
Foreign currency translation (loss)/income, net of tax | (348) | 4,554 | ||||
Comprehensive income | 8,916 | 12,437 | ||||
Less: Comprehensive income attributable to non-controlling interests | 941 | 1,321 | ||||
Accretion to redemption value of redeemable non-controlling interests | (8) | (8) | ||||
Comprehensive income attributable to parent company | $ | 7,967 | $ | 11,108 | ||
Net income attributable to parent company's common shareholders per share - | ||||||
Basic | $ | 0.27 | $ | 0.23 | ||
Diluted | $ | 0.27 | $ | 0.23 | ||
Weighted average number of common shares outstanding - | ||||||
Basic | 30,185,702 | 30,185,702 | ||||
Diluted | 30,185,702 | 30,193,082 | ||||
China Automotive Systems, Inc. and Subsidiaries | ||||||
Condensed Unaudited Consolidated Statements of Cash Flows | ||||||
(In thousands of USD unless otherwise indicated) | ||||||
Three Months Ended March 31, | ||||||
2024 | 2023 | |||||
Cash flows from operating activities: | ||||||
Net income | $ | 9,264 | $ | 7,883 | ||
Adjustments to reconcile net income from operations to net cash provided by operating activities: | ||||||
Depreciation and amortization | 5,114 | 4,856 | ||||
Reversal of credit losses | (114) | (217) | ||||
Deferred income taxes | 136 | 1,019 | ||||
Equity in losses/(earnings) of affiliated companies | 777 | (137) | ||||
Loss on disposal of property, plant and equipment | 670 | 15 | ||||
(Increase)/decrease in: | ||||||
Accounts and notes receivable | 2,335 | (17,383) | ||||
Inventories | 3,109 | 8,285 | ||||
Other current assets | 1,091 | (1,206) | ||||
Increase/(decrease) in: | ||||||
Accounts and notes payable | (10,157) | 1,360 | ||||
Accrued expenses and other payables | 96 | (2,868) | ||||
Other current liabilities | (1,870) | (3,023) | ||||
Net cash provided by/(used in) operating activities | 10,451 | (1,416) | ||||
Cash flows from investing activities: | ||||||
Increase in demand loans included in other non-current assets | — | (14) | ||||
Cash received from disposal of property, plant and equipment sales | 108 | 31 | ||||
Payments to acquire property, plant and equipment (including | (4,493) | (3,160) | ||||
Payments to acquire intangible assets | (18) | — | ||||
Investments under the equity method | — | (5,841) | ||||
Purchase of short-term investments | (14,534) | (34,795) | ||||
Proceeds from maturities of short-term investments | 2,370 | 26,541 | ||||
Cash received from long-term investments | 84 | 557 | ||||
Net cash used in investing activities | (16,483) | (16,681) | ||||
Cash flows from financing activities: | ||||||
Proceeds from bank loans | 34,347 | 20,135 | ||||
Repayments of bank loans | (41,866) | (20,534) | ||||
Cash received from capital contributions of a non-controlling interest | 15,504 | — | ||||
Net cash provided by/(used in) financing activities | 7,985 | (399) | ||||
Effects of exchange rate on cash, cash equivalents and pledged cash | (562) | 2,428 | ||||
Net increase/(decrease) in cash, cash equivalents and pledged cash | 1,391 | (16,068) | ||||
Cash, cash equivalents and pledged cash at beginning of the period | 155,194 | 158,951 | ||||
Cash, cash equivalents and pledged cash at end of the period | $ | 156,585 | $ | 142,883 | ||
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SOURCE China Automotive Systems, Inc.
FAQ
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